Thursday, March 12, 2015

Another month has passed by and it’s time for me to post an article on my favorite subject: dividend income. The reason why I love to post articles on dividend income is because it’s pure numbers. It’s hard to argue the success of long-term dividend growth investing when you can slowly and surely see dividend income rise over time, getting closer to covering one’s expenses.

Two months into the year and the trend of getting paid for essentially nothing continues. And what a wonderful trend that is! Well, I shouldn’t say nothing. Rather, hard work and great decision making of yesteryear continues to pay dividends – literally – in the present and very likely will for the rest of my life. It’s amazing that just one decision can pay off for decades. Repeat great decisions over and over again and, well, your entire life can change.

I hope these monthly dividend income reports provide inspiration for any investors out there that are just starting out. It’s easy to see these payments rising month after month and it shows that it’s possible to one day pay for monthly expenses with dividends, which would provide an investor opportunities and freedom to pursue interests other than full-time work. Without further ado:

February 2015 Dividends Received

Verizon Communications Inc. (VZ) – $21.45

Deere & Company (DE) – $18.00

AT&T Inc. (T) – $23.50

Toronto-Dominion Bank (TD) – $11.43

Vodafone Group PLC (VOD) – $42.86

Raytheon Company (RTN) – $15.13

General Dynamics Corporation (GD) – $12.40

Air Products & Chemicals, Inc. (APD) – $15.40

ONEOK, Inc. (OKE) – $33.28

Clorox Co. (CLX) – $25.90

Realty Income Corp. (O) – $13.23

Omega Healthcare Investors Inc. (OHI) – $31.80

Kinder Morgan Inc. (KMI) – $81.00

Total dividends received during the month of February: $378.20

Bam! Almost four hundred dollars in my pocket. The Jason from the years 2010 to 2014 put in the hard work necessary so that the Jason of today can enjoy this capital and reinvest it so as to grow this total even more. Thanks, past Jason!

What’s even better is that I think I’ve done a fairly good job at managing risk and not going after low-quality businesses simply for yield. Sure, I could easily increase my dividend income by going heavy on mREITs and royalty trusts. But I keep it simple, diversify, and focus on quality. I feel very confident about the future prospects for each one of these companies. Thus, I think the odds are quite high that each company will be paying me more dividend income next February and every February thereafter for the foreseeable future. I don’t have to worry about whether or not Clorox will sell bleach, and I know that Kinder Morgan is going to continue transporting natural gas across its pipelines and collecting fees for doing so. I sleep very, very well at night.

This total is 12.4% higher than the dividend income my Freedom Fund generated in February 2014. That’s a pretty solid improvement, though these year-over-year increases are slowing down in percentage terms as the absolute numbers grow. That’s a good thing, however, as it’s the actual income I’m after. In addition, I’m making less money these days, which is slowing the rate at which I can invest by virtue of having less fresh capital to deploy. Also, my dividend income this February faced a couple headwinds in the form of a smaller dividend from Vodafone after the sale of its Verizon Wireless assets to Verizon, and the loss of a fairly sizable monthly dividend from American Realty Capital Properties Inc. (ARCP). All in all, it’s still a solid move in the right direction.

I was able to cover21.2%of my personal expenses this past month via dividend income alone. I’m pretty happy with that result seeing as how this will probably be one of the lightest months for passive income. The expense side of the coin was held in check this month with nothing abnormal, which I’m also proud of.

This is really just more of the same, which is to say that dividend income is wonderfully consistent in its regular and reliable nature. And that’s one thing I love so much about dividend growth investing. Stocks go up, stocks go down. Can’t predict it or really give a good reason as to when or why it happens. But the dividends just roll in like clockwork, limiting the chance of doing anything dumb as an emotional response.

Looking forward, March’s dividend income should be a blockbuster, which will go a long way toward keeping me on track this year. The broader market still hasn’t really been as volatile as I’d like it to be, which has limited opportunities to some degree. But I’ll just continue marching up Mt. Freedom by regularly combining fresh capital with reinvested dividends to purchase high-quality stocks at a fair price or better. It’s the easiest and best way up the mountain from where I’m standing.

One of my goals this year is to receive $7,200 in dividend income during the calendar year of 2015. With two months in the books I’m behind, with only $811.74 received. That’s 11.3% of my goal for the year. I think March will catch me up quite a bit, but I’ll also have to make up some ground toward the latter half of the year. It’s going to be tough, but I decided to put out a very difficult goal on purpose just to see how I’d do. I’m excited to continue climbing!

1 comment:

My investment goal is to have a 10% increase year to year in dividend payments.So far this year I have an 18% increase for Jan 2014 - 2015 and a 42% increase Feb 2014 - 2015Now I will start to see dividend cut back by the oil boys. Luckily some others increased their dividends.As you progress year ot year the dividends will show a nice bell curve.